Tuesday, July 31, 2012

The prequalification process for bids for the Rubber Research Institutes of Malaysia (RRI) land in Sungai Buloh, Selangor, will start by the end of this year, says a source close to the Employees Provident Fund (EPF).

The source said EPF would call for the prequalification bids as soon as it gets the government's nod for the proposed development of the land.

Pre-qualification bids would be opened to developers who meet the requirements, he said.

"EPF will pen out the requirements and post them on its website soon. Among the criteria are strong financing, expertise, reputation and innovation," the source said.

EPF is the land owner and master developer of the project.
It is buying 890ha of the available 1,215ha RRI agricultural land from the Federal Government for over RM2 billion.

The pension fund is expected to carve out the land in parcels of 20ha to 200ha each, depending on the use of it. The idea is to build low-end to luxury housing and commercial properties.

The balance of the RRI land is to house the Malaysian Rubber Board hub (217ha) and the My Rapid Transit (MRT) Sungai Buloh depot (72ha).

The master planning for the land development is being carried out by EPF's wholly-owned unit, Kwasa Land Sdn Bhd.

An official from the EPF said Malaysian Resources Corp Bhd (MRCB) was not involved in the master planning.

"MRCB's involvement in the project is on an arm's length basis. Like other developers, they will also have to bid for the land parcels," the official told Business Times.

EPF has a controlling stake in MRCB, the master developer of the KL Sentral project in Brickfields, Kuala Lumpur.

It is understood that several property players like Glomac Bhd, Mah Sing Group Bhd and Gadang Holdings Bhd have presented their ideas to the EPF.

The redevelopment of the RRI land forms part of the greater Kuala Lumpur Strategic Development initiative, a project under the 10th Malaysia Plan.

The southern portion of the RRI land, which includes parcels bordering the Tropicana Golf & Country Resort, falls under the jurisdiction of the Petaling Jaya City Council.

The northern portion, which houses the MRT depot, comes under the purview of the Shah Alam City Council.

Monday, July 30, 2012

KUALA LUMPUR: Shares of Malaysian Resources Corp Bhd (MRCB) rose to a high of RM1.78 in late morning on Monday on news that it was on the lookout to acquire property and that it could clinch contracts under the KL Mass Rapid Transit (KL MRT).

At 11.02am, it was up five sen to RM1.78. There were 2.31 million shares done at prices ranging from RM1.75 to RM1.78.

The FBM KLCI was down 0.11 of a point to 1,624.83. Turnover was 284.77 million shares valued at RM250.53mil. There were 278 gainers, 190 losers and 277 counters unchanged.

CIMB Equities Research said on Monday it was maintaining a Trading Buy on MRCB with a price target of RM2.02 on news that MRCB was reportedly looking to acquire property developer Nusa Gapurna.

"While talks are still preliminary, this is a positive surprise and will renew sentiment on the stock. The injection of the 60-acre land bank locks-in a new earnings stream after KL Sentral," said the research house.

CIMB Research said its target price is still pegged to a 30% discount to RNAV.

UOB Kay Hian Malaysia Research had a Buy on MRCB with a target price of RM2.03.

It said that there was a possibility of MRCB acquiring other developers in the near to medium term, given that MRCB's prime landbank is running low (KL Sentral is at maturity stage).

"If so, we believe MRCB will "marry" a partner with sufficient prime landbank (preferably in the Klang Valley), good track record and most importantly, the partner should have good working relationship with the Employees Provident Fund (EPF)," it said. The EPF owns 42% of MRCB.

"Our preliminary analysis focuses solely on Gapurna's three main projects on hand - the PJ Sentral Garden City, Seputeh land and Subang land, which collectively offers a projected gross development value (GDV) of RM12bil spanning over 15 years," it said.

UOB Kay Hian Research said the largest was PJ Sentral Garden City situated on a 40-acre land parcel in Section 52, Petaling Jaya, and construction was expected to commence in the first quarter of 2013.

"Assuming an average take-up rate of 75% and a net margin of 15% (after imputing finance cost from the acquisition), the NPV enhancement is RM725mil or 52 sen a share," it said.

A local newspaper said MRCB was expected to win a contract worth about RM1bil this week for the Sungai Buloh-Kajang (SBK) MY Rapid Transit (MRT) line.

If awarded, this will be the first railway-related job for MRCB this year.

The report said MRCB also won a RM1.33bil contract for the Ampang light rail transit (LRT) extension project in August 2011. The MRT contract is expected to boost MRCB's existing order book to more than RM2.5bil.

This year’s three-day Mapex will be held at Mid Valley Convention Centre from October 19.

Ng said Rehda was expecting at least 50,000 visitors to the exposition, which would also feature several talks by experts in the property investment and legal fields.

“Mapex is an ideal platform for gathering of property developers, financiers, legal experts and also property consultants – all under one roof to assist the home-buying public in making informed decision in their property investment,” he said.

He said that over the years, Mapex had grown to become the signature property event of the country, receiving an average participation of about 80 developers in each exposition.

“Firmly established as the leading property exhibition in Malaysia since its inception in 2000, the latest edition of Mapex brings together property developers from all over Malaysia to offer a wide range of properties to prospective buyers and investors,” he said.

Thursday, July 26, 2012

KUALA LUMPUR: Sunway Bhd's earnings will be sustainable despite the deterioration in the property market, said MIDF Research.

In a note today, it said Sunway will be helped by the higher construction orderbook replenishment as well as consistent earnings from the property investment segment.

"Construction earnings contribution will improve substantially in financial year 2013 as the light rail transit and My Rapid Transit (MRT) move into a more advanced stage of construction," it said.

MIDF said construction orderbook replenishment of Sunway has exceeded its initial target of RM1.5 billion and year-to-date, the company has secured RM1.6 billion worth of construction works which also included some internal jobs.

"The MRT package V4 from Section 17 to Semantan accounted for 73 per cent of year-to-date replenishment," it said.

Its chief executive officer and executive director, Stewart LaBrooy, cited examples in Shah Alam where companies were selling their land and moving their factories away to other areas such as Nilai.

“The Klang Valley is now too expensive for a lot of investments (such as) in Shah Alam. Land prices for industrials in Shah Alam for recent transactions are now about RM120 per sq ft (psf) compared with Petaling Jaya 10 years ago at RM90 psf. It is getting to a point where Shah Alam will not be able to have price points to support industries per se,” LaBrooy told a media briefing on the company's second quarter ended June 30 earnings.

“So you are finding industries now moving out to areas (such as) Nilai which is where we are (also) buying now. They are selling their land for high prices and moving their factories out because it is just getting too expensive or the value is too good to ignore as they can build brand new facilities and do just as well.

“House prices seem to be rising so rapidly in the Klang Valley so a lot of the engineers, workers and all are also moving outside the Klang Valley. Industries today are lacking a good pool of labour who are close to the source.”

The office market in Kuala Lumpur was “just too expensive” and not feasible to be bought due to the ample amount of supply, he said, aadding that the outlook would be challenging moving forward.

On this saturated market backdrop, Axis REIT would now focus on the property markets in Penang and Johor Baru and adjust the strategy accordingly.

The company had just completed the purchase of two properties named 1 Logistics DC in Bayan Lepas and Prai, Penang, this year and it is also eyeing another two properties in Johor.

“We are also buying two properties in Petaling Jaya but this came about basically because it is owned by our promoters of the REIT. One of the directors owns the building so we can get it at a very good price. We got that at a big discount and we're going to redevelop it and enhance the asset so that we can get a much better return for our shareholders,” he said.

Meanwhile, LaBrooy pointed out that the fall in yield differentials between Malaysian and Singapore REITs showed that the market was very bullish on the growth of Malaysian REITs.

Axis REIT is presently in negotiations to acquire several properties mainly located in the Port of Tanjung Pelepas in Johor and could purchase up to seven additional properties by the end of this year compared with five acquisitions last year.

“It is quite challenging but we find it very rewarding to find good assets to put into the REIT,” he said, adding that in general, the managers would always maintain gearing levels below 40%.

Axis REIT reported second-quarter net profit surging 23% to RM19.45mil with revenues rising to RM32.88mil from RM28.44mil in the same period a year ago.

IPOH: MK Land Holdings Bhd will build more affordable housing next year to counter the potential recession, its chairman Tan Sri Mustapha Kamal Abu Bakar said.

He said affordable housing was particularly saleable during recession and that the company would concentrate its projects in Selangor, Perak and Kedah.

"We have gone through three recessions since we started 28 years ago and we are still around. The secret is to have a basket of projects," he said.

Speaking to reporters after handing over keys to house owners at Meru Perdana here yesterday, Mustapha Kamal said the company would not concentrate on upmarket or commercial development next year. Although the focus is on affordable housing, the company will not compromise on structural integrity, sound proofing, termite resistance and quick completion.

"I am not worried," he said when asked on how the company would face a possible recession. He added that only when the market recovers, the company would build more upmarket projects.

"We own large land bank which allows us to build 114,000 units of various types of projects," he said, adding that critical mass was created from building affordable housing.

"We get our profits from shop lots that are built near affordable housing projects," he said.

Tuesday, July 24, 2012

“We are definitely looking at more prospects in the Klang valley,” group managing director Datuk Robert Tan Seng Leong told StarBiz yesterday.

Tan: ‘The prospects in the Klang Valley is good and is quite stable.’

“The prospects in the Klang Valley is good and is quite stable,” he pointed out.

BCB currently has three ongoing projects in the Klang Valley with total gross development value (GDV) of RM2.6bil.

“We have 151 acres in Kota Kemuning, Shah Alam, which would be allocated for a bungalow development. We also have a bungalow project in Taman Yarl and a luxury condominium development - Concerto Kiara @ Mont Kiara.”

He said response for the company Concerto Kiara, which was launched earlier this month,was good.

“Our other developments are in Johor. In Batu Pahat, BCB has a market share of between 60% and 70% of the projects being undertaken by about 26 developers there.”

Tan said the company had about 1,000 acres in Batu Pahat.

For its third quarter ended March 31, 2012, BCB's net profit rose to RM3.95mil from RM2.42mil a year earlier mainly due to better sales margins, while revenue fell to RM32.26mil from RM34.97mil previously.

For the nine-months ended March 31, net profit rose to RM7.64mil from RM6mil a year earlier while revenue rose to RM89.70mil from RM80.35mil previously.

In its notes accompanying its quarterly results to Bursa Malaysia, BCB said it was optimistic of its performance for its current financial year.

“In the coming months, the group will facilitate the launch and development of its Klang Valley properties.

“The group is optimistic that these projects as well as existing ones will contribute positively to its earnings,” the company said.

KUALA LUMPUR: The iProperty Group today announced its partnership with LJ Hooker, Australia's best-known and most trusted real estate brand.

Listed on the Australian Securities Exchange, the iProperty Group owns and operates Asia's number one network of property websites under the iProperty.com umbrella brand.

The partnership between the two parties will see over 50,000 sales listings published from over 690 LJ Hooker offices in Australasia on the iProperty Group's network of property portals in Malaysia, Indonesia, Hong Kong, Macau and Singapore.

iProperty Group Chief Executive Officer Shaun Di Gregorio said in a statement that the agreement will allow LJ Hooker agencies to advertise their for sale properties in key Asian markets.

"This can tap into a whole new market of potential property buyers and investors in the Asian region," he said.

The partnership means that when a vendor lists a property for sale with LJ Hooker, that property will also be advertised on the iProperty Group's network of property portals.

Di Gregorio added that the partnership is in line with the company's strategic mission to deliver more choice for their consumers who are in search of properties locally and internationally.

LJ Hooker's General Manager of International and Head of Network Development Bill Russell said the company was proud to be in partnership with the leading operator of property portals in Asia.

"LJ Hooker is committed to growing and expanding the reach of our agents, not just in Australia and New Zealand but also in Asia.

"Our aim is to provide the best real estate experience and service for our customers and to continue to be the leading brand and the name that is synonymous with real estate," he added.

Monday, July 23, 2012

PETALING JAYA: Despite the overall gloom and doom in the global economy, a glut of condominiums and cooling measures by Bank Negara to deter speculation in the overall property market, the general observations on the ground indicate strong sales for certain segments of this market.

This underscores the fact that real estate continues to be a preferred investment choice in the current economic climate.

The latest report by Knight Frank Real estate highlights 1st half 2012 said there were five completions in the first six months of this year, bringing the total cumulative supply in Kuala Lumpur to 29,882 units.

Another five developments are expected to be completed in the second half this year. This will bring the cumulative supply to 31,163 units. These numbers cover the high-end condominium market priced RM500 per sq ft and above.

These new completions, coupled with existing supply and weak occupancy rates, are expected to put further pressure on the rental market.

The report also noted that smaller sized apartments and SoHo units were becoming a mainstay in the Kuala Lumpur condominium scene and the dual-key concept was steadily gaining acceptance and popularity among developers and purchasers.

These two over-riding trends in the high-rise residential sub-segment help add product diversity, it said.

Dual-key units comprise a studio apartment unit attached to an otherwise standard condominium unit. Such units come with two separate doors with one leading to the studio unit, and the other to the adjoining unit, bonded with a common foyer.

While there were multiple SoHo developments being launched, three dual-key concept residences entered the market and all three recorded good take-up rates, the report said.

The recent increase in the number of new launches offering smaller units in established locations and popular suburbs is driven by the scarcity of land and high land costs, as well as pressure for developers to keep end-pricing affordable. Although the units are small, on a per sq ft basis, the price will be higher than the larger units.

As for pricing, in the primary market as when buyers buy directly from the developers, the high-end condominium sector saw a slight drop in average asking prices in the city while the fringe and suburban areas generally demonstrated a stable trend.

Similarly, there was a notable decline in transacted prices in the city's secondary market where buyers buy directly from owners instead of from developers. Projects located on the fringes of the city, however, saw more sales and leasing activities.

DTZ Research report for Kuala Lumpur Q2 2012: Resilience across all sectors said the overall residential market was “stable with average capital and rental values experiencing marginal increases.”

“The outlook is, however, more cautious as sentiment is clouded by both internal and external issues, including those of a political nature,” the DTZ report said, adding that the market was expected to experience a period of slower growth going forward.

In the office segment market, the market was relatively stable despite a spike in new supply.

Menara Felda will be the new corporate headquarters of Felda Land Development Authority which has just listed Felda Global Ventures Holdings in one the of biggest initial public offerings internationally for the year.

Menara Darusalam, a mixed development, will house the new Grand Hyatt Hotel. With several recently completed office buildings in the vicinity such as Menara Worldwide and Menara Prestige still filling up spaces, the new additions will add pressure on rents, DTZ report said.

Prime office rental rates remain stable and resilient at the moment, averaging RM6.23 per sq ft per month, while top tier offices are commanding about RM7.90 per sq ft per month, the report said.

“With a substantial pipeline of supply completing in the second half of this year and next year, rents are forecast to fall,” the report said.

Knight Frank said the cumulative supply of office space in the city stood at 47 million sq ft and will increase to 48.6 million sq ft with the completion of three new offices by the end of this year. The supply in the city fringes today stands at about 17.5 million sq ft. Some 4.1 million sq ft will be added to the fringes by the end of next year.

PETALING JAYA: The next 18 months will be a busy time for Syarikat Prasarana Negara Bhd as it goes full steam ahead with its rail and property projects, what its group managing director Datuk Shahril Mokhtar once called its “rail-and-property play”.

Besides teaming up with the Crest Builder group for the Dangi Wangi project, and with Naza TTDI group for the Taman Tun Dr Ismail project, Prasarana has a few other projects which entail working with other developers.

The company is currently evaluating plans from six bidders for its 6.5 acres in the up-and-coming township of Ara Damansara.

“We are in the final stage of evaluation and will not be able to estimate the gross development value (GDV) of the project just yet. We expect to present the results of our evaluation to the board by mid-August and to make the formal award by the middle of September,” Shahril told StarBiz.

He said the key idea of this particular project was to have a park-and-ride facility.

“The developers must use their creativity on how to build the other commercial development that can also include a residential element around the park-and-ride facility,” he said.

It is understood that Prasarana is looking for a joint venture (JV) partner on a profit-sharing basis who has the experience and track record.

Speaking on its first property development along its rail line on the site of the Dang Wangi light rapid transit (LRT) station, he said the company is finalising details with its JV partner.

The project, with a GDV of about RM220mil, is awarded to a JV company between Crest Builder Holdings Bhd unit Crest Builder International Sdn Bhd and Detik Utuh Sdn Bhd.

“We want to start work as soon as possible but there are a lot of regulatory approvals that we must seek. Thus, we expect to start groundwork by the second half of next year,” he said.

The company had also recently teamed up with Naza TTDI Sdn Bhd to undertake a condominium project in Taman Tun Dr Ismail.

The project would be based on a 30:70 profit sharing model, with Naza TTDI doing most of the development work on Prasarana's land, valued at RM12mil.

Its fourth project is currently at the tendering stage. This will be on a two-acre site near the

monorail station in Brickfields. The tender ended on July 21.

Its fifth project, at a pre-tender stage, is currently being worked on. Once it has worked out the details, it will tender out Putra Heights and the former bus depot land in Taman Melawati for development.

“We will make announcement for Putra Heights by the end of the year and open up the tender for Melawati by the second half of next year,” said Shahril.

IPOH: The Haven, the luxury lakeside residence in Tambun, Ipoh is set for completion by the middle of next year, said The Haven Sdn Bhd chief executive officer Peter Chan.

He said the group was the first developer to conduct a “topping-out” event for the three towers simultaneously, and construction of the project was ahead of schedule. “The project has surprised many people with its speedy sales and construction by topping out all three towers concurrently,” he said at a dinner to mark the topping-out ceremony on Saturday. The Haven is Perak’s largest and tallest residential condominiums.

Chan said that out of the 500 units, over 75% has been sold while another 100 units were still available with each unit costing between RM600,000 and RM3.8mil.

The Haven would be managed by international hospitality chain – Best Western which would market and lease out the apartments on behalf of owners. At an average price of RM600 per sq ft, The Haven is located near Sunway Group’s Lost World of Tambun water theme park and the Banjaran Hotsprings Retreat in Tambun.

“I would like to inform that land application in Parit Buntar has been exhausted, which means there is no more government land left for development following the high-level of development taking place,” he said, adding that the state government would ensure there was enough demand in every development to avoid any over-supply situation.

“Ipoh is not about old abandoned buildings. We have many new projects,” he said after officiating at the topping up ceremony for a RM270mil luxurious condominium project in Tambun.

Saturday, July 21, 2012

BERJAYA Land Bhd's (BLand) The Great Mall of China (GMOC) is set to outdo others for the bragging rights as the world's largest shopping mall.

And BLand has every reason to be confident of GMOC's success, particularly in 'terms of demand for space leasing' as Beijing has high per capital income of US$12,447 (RM39, 200) in 2011.

By the World Bank's standard, cosmopolitan Beijing is already considered a wealthy city, on par with London, New York or many other rich cities around the globe.

GMOC, the world's biggest integrated mall complex, is estimated to be worth about RM7.5 billion on a 32ha site in China's Hebei Province.

It is expected to be completed in five years. GMOC has strategically positioned itself in an area where massive integrated public transportation project is due to take place.

One notable project is a big subway station, which is expected to be completed in 2018, linking it to neighbouring TongZhou.

TongZhou is about 20km away, and the subway will bring its distance to GMOC within 2km, reducing travel time to mere minutes from half an hour now.

Beijing's population of over 21 million people, excluding the population of its neighbouring cities such as Tian Jin, Hebei and Yan Jiao, which are also booming due to the country's sound economy, is expected to give rise to the project's popularity.

The vision for such a project of epic proportions is a timely investment by the Berjaya Group founder Tan Sri Vincent Tan.

GMOC was planned at a time the Chinese market began witnessing a boom followed by the gross increase of the republic citizens' spending power worldwide.

Tan definitely knows his market.

The Berjaya Times Square, which is the eight largest building in the world in terms of floor area, is proof of the conglomerate's big dreams and visions.

Unlike other shopping malls in Beijing, which are mostly purely shopping driven, GMOC will be the first to break out of the ordinary shopping culture in China by housing three indoor theme parks.

GMOC will also impress its patrons with its many world-class amenities, including a multi-purpose convention hall to cater to all forms of business needs.

With Phase One due to be completed in October next year boasting of three all-weather and indoor theme parks namely Extreme Park, Family Park and Water Park, GMOC is poised to set the Malaysian flag sailing high globally.

All hillside villas are designed to look outwards towards the forest park, or the landscaped strip gardens. Ho points out that Rymba Hills, which has its name derived from the Malay word meaning “primary forest”, has only 4.1 units per acre. “It is very low density, in an area that is known for quite a number of high-rise residential developments,” says Ho.

He points out that Sunway had initially planned for 960 condominium units on the Rymba Hills site, before changing the plan about five years ago. “Even then, it would not have been such a high density development, with about 50 units an acre.”

It is worth noting that had Sunway stuck to the original project plan for the condominiums, the gross development value (GDV) would have been between RM700mil and RM800mil (compared with the GDV of RM270mil for the three-storey villas in Rymba Hills).

“Yes, we would have made a lot more money. But Sunway is always a responsible developer. We respect the environment, and the social aspect of development for this area. There are a few thousand condominiums around this area (Kota Damansara, Mutiara Damansara and Damansara Perdana).

“So, when we decided to change the development plan to one with a much lower density, the authorities were only too happy to approve the conversion,” Ho recalls.

Highlights of Rymba Hills, which is scheduled to be completed by end-2012, include a fully equipped clubhouse with a gym, recreational pool deck and infinity pool.

Type B has a contemporary design, with its entrance at the centre of the unit or the middle floor.

Type C has a master suite (bedroom and dedicated pantry and study room) on the highest floor, linked to roof garden.

Ecological design

Ecological design features include large balconies offer solar shading and anti-glare by way of their generous overhangs, while sun shading screens are placed on the north western part of the levation to screen off the strong afternoon sun.

Building layouts are designed to facilitate natural and cross ventilation. Other passive thermal design strategies include the use of cavity walls for western facing wall, sun shading screens and use of insulation in roof space. The development was also given a provisional Green Mark Gold award by Singapore's BCA (Building and Construction Authority).

“About 30% of the units are still available,” says Ho.

Rymba Hills is located near colleges, hypermarkets, lifestyle neighbourhoods (such as Sunway Giza), commercial areas (Dataran Sunway) and shopping malls such as 1 Utama and The Curve. It is accessible via Damansara-Puchong Highway (LDP) and New Klang Valley Expressway (NKVE).

Ho points out that Rymba Hills is among the newer phases of Sunway's 450 acres in the Kota Damansara area. “Our landbank here is about 90% developed, since we started development about 17 years ago.”

Completed Sunway projects in the area include Sunway Sutera and Opal Damansara condominiums, Laman Impian garden villas, Challis Damansara and Parkview townhouses as well as Sunway Damansara Technology Park.

Presently under development is Sunway Nexis, which is a commercial development consisting of three-storey retail shops with sizes ranging from 4,133 to 8,718 sq ft, 13-storey office suites with sizes ranging from 925 to 1,636 sq ft, and a 20-storey flexi office block.

Ho says the development will have terraced villas and semi-Ds on elevated freehold land, with a 14-acre private forest. “We have sold more than half of the 107 units in the first phase, which is priced RM1.7mil to RM2.7mil.”

According to Ho, the group was not too concerned about the perceived slowdown in the demand for mid-high and high-end residential properties this year, due to stricter bank lending guidelines.

“Our buyers know our branding. They appreciate and continue to see value in Sunway properties.”

There was this small 700 sq ft condominium unit that seemed rather promising for retiring in, priced at more than half a million ringgit. There were no steps to manoeuvre, no slippery floor tiles and the bath was elderly friendly. The project had all the merits for retiring in with nearby amenities.

There was another unit, about RM800,000, which was about twice the size, which, from the start, was way beyond the radar of affordability. So off to the financiers.

The first, after looking at the relevant documents, and assuming the purchase would be for the small unit, looked up and smiled broadly. Doable!

The little heart smiled, relieved! Incidentally, according to ancient Chinese culture and beliefs, it is the heart that is the fountain of wise decisions - and bad ones - not the mind. That is why, the word wisdom (hui) is written with the heart symbol as its base, or root word. Unlike Romanised languages, Chinese is based on pictograms or pictures.

So let's consider the second and bigger unit. Doable! That is shorthand for getting the bank's stamp of approval, that is, getting a loan would not be a problem.

But wait! It will be a stretch after retirement, she cautioned.

A second and third bank officer were consulted. Both gave an outright No! even for the small unit.

The conversation went something like this:

“We could approve it for you. We just lengthen the tenure up to 20 years but you make your repayments based on a 10-year tenure. But you will be the one to suffer when you retire.”

The third officer said: “You can put in 40% of the purchase price, instead of 10%. Or you can stay with 10% downpayment, we stretch your repayment, but six months before the unit is completed, you sell your present house, and put in a big lump sum. But you will be the one to suffer because it is a huge risk you are taking.”

They said it will not be right to earn the commission because they will not be doing their good turn for that day if they were to go ahead with the loan application. They want the good karma to remain with them. Both convey the same message not a wise purchase at all. So perish the thought.

Before parting ways, they brought up several reasons why a property purchase was not the best decision. That was when the moment of truth came, which brought about the sobering effect. Being a bit defiant, another type of financier certainly not an Ah Long was consulted; a reputable lender, but one that does not come under the purview of Bank Negara's regulations.

Incidentally, the most recent change in lending criteria when evaluating loan eligibility is based on the net income of applicants, and not the gross income, as was done previously.

This new lending guidelines deduct all personal commitments which may include car and computer loans, personal and credit card loans. It also includes contributions to the Employees Provident Funds and other deductions. The loan application is based on the net figure.

Another broad smile came from the fourth financier. No problem! Doable. Unfortunately, the terms and conditions were not attractive. At that point, the question was not how desirable the property may be, but how much does one want it? Does the end justify the means?

When one arrives at such a metaphorical fork in the road, there will be two sets of emotions. The greedy little heart says, “Go on, take the risk”. And there will be all sorts of justifications you've worked long enough and you deserve it. While wisdom says, “Wait! How will you finance it after retirement? Do you want this apartment at all cost?”

The crux of this rigmarole is this, there are always ways to get around rules and regulations in order to have what we perceive as “our prize”.

When it comes to the stage when one wants something at all cost despite the hordes of naysayers and the little barriers to entry, then maybe it is best to just walk away.

A property consultant said he has come across clients who want to buy a property so much that they begin to take all sorts of risks. “Buying a property should not stretch one's resources to the point of having to give up the little treats in life,” he says.

So, there goes the little 700 sq ft to somebody else!

The saying “when there is a will, there's a way” does not sit well with deputy news editor Thean Lee Cheng.

PROPERTY prices are a favourite subject for conversation among Malaysians.

It is to be expected. Everyone is looking to buy a house or apartment, either to have a roof over his head or to sell it for a profit at some point in the future.

To have a house or apartment of your own has become a must for most of us Malaysians today, a condition further encouraged by the Government's home ownership programme.

On the face of it, this is a good policy. Everyone should be given the opportunity to have a place of his own, a home that offers a decent level of comfort and well-being, yet within his means.

However for the average Malaysian, particularly those living in or around urban centres, the prices of property have risen so high that they can no longer afford to buy.

As an expert in the real estate sector in Malaysia pointed out recently, the prices of homes in a city such as Petaling Jaya have risen more than 30 times in the past 40 years. In the same period, salaries have gone up a mere 10 times.

As a result, people are now expected to downgrade from a landed property to an apartment, usually. Even so, people are paying more in monthly instalments and taking longer up to three times to fully repay their home loans. In short, if you buy an apartment today, you will probably spend the rest of your working life paying for it.

As a result, they also end up paying a lot more in interest to the bank, compared with their parents or grandparents 30 or 40 years ago.

Given that 76% or five million households in Malaysia have incomes below RM5,000 a month, many homes on the market today are priced beyond their affordability.

In addressing this issue, the Government has imposed a quota for low-cost housing projects. Private developers are expected to chip in by setting aside a certain percentage of their projects for low or medium cost homes.

More drastic measures have recently been proposed. For instance, the Kedah state government is mulling a proposal to require private developers to allocate up to 60% of their projects for affordable housing, up from 30% now.

Over and above this proposal, the PAS-led government is also mulling the possibility of restricting the sale of property in certain districts in Kedah to Kedahans only. The state believes this move would reduce speculation on property prices, thus ensuring that houses remain affordable for Kedahans.

Such proposals seem ill-conceived, to say the least. On the whole, be it at the federal or state level, a more strategic plan is necessary to meet the housing needs of those in the lower to middle income group.

At the same time, there must be room for a dynamic property market where investors can expect some returns for putting money into property.

Developers are well aware of the need to ensure that all Malaysians have equal access to housing that they can afford, and for the most part are supportive of any move to this end.

However, it must also be noted that for developers, other concerns come into play when planning and deciding on new projects, such as types of houses, price range and location.

As business entities, property development companies have to meet profit expectations of shareholders as well, and building homes and selling them at RM42,000 or below is certainly not going to help meet those expectations, especially in the urban centres where land costs are very high.

Another consideration is mobility. For the lower income group in particular, the ability to get around for work, school and other daily necessities at an affordable price is essential.

For the most part, it does not make sense for them to buy a low or medium cost home in a locality that is not served adequately by cheap public transportation to enable them to go to work or for their children to go to school.

For them, buying a car may not be an option, and taking the taxi to work is a luxury many cannot afford.

For these reasons, it makes sense for the Government to build affordable housing for the lower income group, with contributions to subsidise these projects funded by private developers.

Developers would have had to spend money anyway if they are to meet the quota of affordable housing in their respective projects. The money would be better used if it is channelled to the Government for a more strategically planned housing programme.

The Government could also ensure that the right infrastructure be put in place to ensure that those who buy into the low or medium cost homes that it is building also have access to affordable public transport and other facilities. With almost unlimited land bank, the Government could easily build a school within the development as well, thus meeting another essential need.

By taking full responsibility for affordable housing, the Government could also ensure that they are well maintained. For the most part, low-cost apartments in Malaysia are not well maintained.

If residents or owners fail to pay the monthly service charges regularly, there would not be sufficient funds to ensure proper maintenance. As a result, many of such apartment blocks end up looking like slums in just a few years.

Any attempt to control property prices runs against the free-market concept that we practise. For most of us, even those who buy a house to live in for the long term, putting money into property is a form of investment.

When we were younger and had just been married, we struggle to pay the mortgage for a house that we believe is reasonably big enough for our spouse and two or three children.

When our children are grown up and on their own, we may decide to sell the house and opt for a small apartment instead. Hopefully the house would have appreciated in value and there would be a decent sum left for our retirement.

Is that too much to expect?

Teh Lip Kim is the MD of SDB Properties Sdn Bhd, a lifestyle property company. Bouquets and brickbats are welcomed. Send by email to md@sdb.com.my.

IPOH: MK Land Holdings Bhd will build more affordable housing next year to counter the potential recession, its chairman Tan Sri Mustapha Kamal Abu Bakar said.

He said affordable housing was particularly saleable during recession and that the company would concentrate its projects in Selangor, Perak and Kedah.

"We have gone through three recessions since we started 28 years ago and we are still around. The secret is to have a basket of projects," he said.

Speaking to reporters after handing over keys to house owners at Meru Perdana here yesterday, Mustapha Kamal said the company would not concentrate on upmarket or commercial development next year. Although the focus is on affordable housing, the company will not compromise on structural integrity, sound proofing, termite resistance and quick completion.

"I am not worried," he said when asked on how the company would face a possible recession. He added that only when the market recovers, the company would build more upmarket projects.

"We own large land bank which allows us to build 114,000 units of various types of projects," he said, adding that critical mass was created from building affordable housing.

"We get our profits from shop lots that are built near affordable housing projects," he said.

Zhejiang executive director Xu Yong said the company will build beach residences, comprising six 18-storey towers with over 1,000 units.

Zhejiang will also develop a Fisherman Wharf commercial street, modelled after the Fisherman Wharf in San Francisco and Hong Kong.

"The Fisherman Wharf and residences will bring attention to the whole Goldcoast development.

"Already we have interest from Asian investors who want to buy the properties and invest in the development," Xu Yong told reporters after signing the cooperation agreement yesterday,

Xu Yong said the total investment in the project will be around RM700 million, with the financing coming from China.

He added that the project will be developed in four phases over five to six years, starting early next year.

"We will form a consortium to undertake the project. It will comprise Zhejiang, SGSB and several local construction firms. We will be calling for tenders to help build the properties.

"There will be a lot of local involvement in the project," he said.

Xu Yong said this will be the first of many investments that Zhejiang is considering in Malaysia.

"We hope there will be many more cooperations with SGSB, and the Selangor state government," he said.

SGSB is a 70:30 joint venture between Sepang Bay Sdn Bhd, which is majority controlled by shareholders of CNI Group, a multi-level marketing outfit in Indonesia, and Permodalan Negeri Selangor Bhd, the Selangor state investment arm.

The company owns 2,084ha of coastal land in Sepang.

Completed projects at Sepang Goldcoast include the Golden Palm Tree water villas and the Golden Palm Tree Resort & Spa.

SGSB executive vice-president Wong Mun Chong said the company is at the tail end of finalising the masterplan for the 2,084ha land.

The Goldcoast development is divided into three areas - north coast, central coast and south coast.

SGSB is currently developing the south coast where the partnership with Zhejiang comes in.

PNSB is the Selangor state investment arm while Sepang Bay is the Malaysian property arm of the Istana Group, a major property developer in Indonesia.

Sepang Gold Coast is an international holiday resort in Sepang.

Zhejiang Zhongxia Investment, based in Shanghai, is engaged in investment and development of leisure and commercial real estate, biotechnology and cultural artifacts.

Zhejiang Zhongxia Investment executive director Xu Yong said the company would be involved in the construction and marketing of the new project in Sepang Gold Coast, comprising residential, hotel and commercial units with a gross development value of about RM1bil.

“The planned construction of about 200,000 sq m is targeted to commence next year,” he told a media briefing after the MoU signing yesterday.

Xu said that construction covering a total area of 47ha was expected to be completed within five to six years.“We are looking at Asian investors or buyers for the project,” he added.

HONG KONG: Far East REIT, a hospitality trust launched by Singapore's largest privately owned property developer, started pre-marketing yesterday an up to S$700 million (RM1.76 billion) initial public offering (IPO), betting on demand from yield-hungry investors burnt by volatile global markets.

With interest rates around the world hovering near record-lows, the fixed return on real estate investment trusts (REITs) are helping lure investors amid an uncertain outlook for equities.

The MSCI World Index has fallen nearly seven per cent since its March peak because of concerns over Europe's debt crisis and China's economic slowdown.

The REIT, which owns hotels and serviced residences in Singapore, is being marketed at a yield of 6-6.5 per cent, said a source with knowledge of the deal who was not authorised to speak publicly on the matter. The yield is slightly below the 6.63 per cent average for all REITs listed in Singapore.

The IPO is set to be the biggest in the city-state so far this year.

"It's still a relatively risk-averse environment, so REITs are something that people are looking at because they give good yields," said Wee Liat Lee, head of property research at BNP Paribas Securities (Asia) here.

"Sentiment has been pretty sizeably affected by the slowdown in China recently, so the interest is diverted to Southeast Asia and Singapore as a capital-raising platform."

The yield for the Far East REIT compares with about 7.9 per cent offered for Ascendas Hospitality Trust's deal this week and six per cent for CDL Hospitality Trust.

By comparison, so-called specialized REITs that also bundle hotel properties traded at an average 6.6 per cent yield in Singapore, 6.7 per cent in Hong Kong and 7.4 per cent in Malaysia, according to Asia Pacific Real Estate Association (APREA) data.

The REIT, sponsored by Far East Organisation, comprises seven hotels and four serviced residences in Singapore with about 2,500 rooms, the source added.

The deal will come on the heels of Ascendas Hospitality Trust's US$304 million (RM957.6 million) offering, which had to be relaunched this week after the company was forced to remove one of the hotels from its portfolio.

It will be a welcome development for equity capital markets in Singapore, where issuance plunged 74 per cent to US$4.7 billion in the first half of the year from the same period of 2011.

The slump was much steeper than the 30 per cent decline in stock sales in Asia ex-Japan, according to Thomson Reuters data.

Far East REIT and its bankers will start taking orders for the IPO on August 6, with pricing slated for August 15. The REIT is set to debut on the Singapore stock exchange on August 27.

About half of the orders for the offering are expected to be covered by cornerstone investors, the source added.

DBS Group, Goldman Sachs and HSBC were hired as joint global coordinators and joint bookrunners on the deal.

This year's rally in stocks and bonds of mainland Chinese real estate developers looks set to peter out, analysts say, as valuations have become less attractive and hopes have dwindled for any rollback of steps taken to dampen home prices.

The tide appeared to start turning during the past week, though China's property sector remains among the best performers across Asia this year, easily outpacing benchmarks.

"The best performance for the China property sector is behind us and further gains will be difficult because of rich valuations and economic headwinds in the second half of 2012,' said Owen Gallimore, ANZ head of credit strategy in Singapore.

"It is doubtful if people want to buy beyond the top-tier names and into the mid-tier after such a strong rally," he said.

An index of property shares in Shanghai is up 17 per cent this year in contrast to the Shanghai Composite, which has drifted into negative territory and is currently near the year's lows.

Valuations for the MSCI China real estate stock index have nearly doubled since the fourth quarter in 2011 when they hit a record low of just four times forward price-to-earnings.

According to Deutsche Bank, a weighted index of 45 bonds from 32 property companies produced a return of 25 per cent in the first half of 2012, easily beating the 6.7 per cent total return for the overall JP Morgan Asian Composite bond Index.

Some individual bonds have even beaten that. Shimao Properties' bond prices maturing in 2017 rose 66 per cent from the October lows.

A rebound in transactions mainly from first time home buyers came as a relief for the property sector earlier this year, lifting it out of the funk it had fallen into by the end of 2011.

According to Macquarie Capital Securities sales volumes in China's tier-1 and tier-2 cities on a four-week average basis bottomed out around February this year and have gathered pace after June.

But as house prices were still in decline through this period and there was growing unease over China's economic slowdown, hopes grew that Beijing would rethink measures taken in the past two years to cool off an overheating property market.

But now, with signs that home prices have bottomed out, the thinking is that Beijing is more likely to leave controls in place to forestall any rebound in home prices.

After data released on Wednesday showed that China home prices broke eight straight months of declines in June, shares in the property sector began retreating faster.

Investors are worried over how the government would respond should sales volumes stay strong and prices begin rising.

LONDON: UK property businesses are hunting for bargains in the country’s battered real estate market, encouraged by heavy discounts that show how the eurozone crisis has hit confidence in the sector, Lloyds Banking Group said.

Data from the bank’s quarterly Commercial Property Confidence Monitor showed the net balance of major businesses intending to make purchases in the next six months rose to 57 in May, from 52 in February, while the net balance of fund managers keen to invest rose to 38 from 36 over the same period.

A net balance is the sum of all positive and negative survey responses which ignores the middle ground. A positive number, for instance, would indicate that there were more bullish responses than bearish ones.

One survey respondent, a small company, told Lloyds that “property is so cheap people are starting to buy,” the bank said in the report.

Lloyds managing director of corporate real estate, Lynda Shillaw, said there was clearly pessimism about the market’s near-term prospects.

“Investors are nevertheless seeing the opportunity for longer term value growth when buying at today’s prices,” she said in a statement.

UK property values fell 2% in the first half of 2012 and recovery was expected to be still far off due to the uncertain economic outlook, Investment Property Databank said last week.

Despite the broader growth in investment appetite, Lloyds said most businesses expected activity in the UK property market to slow over the next six months, with the number of pessimists outweighing the number of optimists among small and medium-to-large businesses.

A Reuters poll of economists predicted on Thursday that the eurozone has sunk back into its second recession since 2009 while a second poll said the British economy would stay in recession three months longer than previously expected.

The condos, with an estimated gross development value of RM2.6 billion, will be developed over two phases and completed in five years.

The project, Zhuoda's maiden overseas venture, will be undertaken by a joint-venture company - Zhouyuan Iskandar Sdn Bhd in which Medini Iskandar has a 20 per cent stake.

The project, tentatively named Medini International, will be built at a cost of between RM600 million and RM700 million, said Wang Bin Wu, chief executive officer of Zhouyuan Iskandar.

The Chinese group was attracted to invest in the area due to Medini-specific incentives such as tax exemption and no restriction of sales to foreigners, he added.

Sales of the units, the cheapest of which in Phase One is expected to be sold at around RM1 million, will be targeted mainly at Singaporeans, Chinese, Malaysians, Koreans and the Japanese.

IIB's president and chief executive officer Datuk Syed Mohamed Syed Ibrahim is confident the units will have a good take-up rate, given that recent property launches in Iskandar Malaysia have been well received, especially after the completion of some infrastructure projects under the 9th Malaysian Plan.

"There is, in fact, now upside potential for new quality offerings in the market with the completion of the infrastructure projects," he told reporters here yesterday after formalising the joint-venture agreement with Zhuoda's Beijing-based unit, Qingdao Zhuoyuan Investment Holdings.

Medini, located in the Nusajaya development zone, is envisioned to be the central busiest district of Nusajaya.

KUALA LUMPUR: There is still an upside potential for residential property prices in Iskandar Malaysia, Johor, as the infrastructure is being completed and catalytic projects to lure more investments are still coming in.

Medini chairman Jamil Muttalib (left) exchanging documents with Wang.

Iskandar Investment Bhd president cum chief executive officer Datuk Syed Mohamed Ibrahim said locations that did not have immediate development potential would have better capacity and capital value with the completion of infrastructure projects such as highways.

He said the average price of a high-rise residential unit, which has not risen much in the last 10 years, hovering in the region of RM300 to RM350 per sq ft (psf), was now seeing higher prices.

Syed Mohamed said when UEM Land Holdings Bhd launched their first waterfront project and Imperia (condominium), the value of the unit was about RM750 psf.

“Following this success, Dijaya Corp Bhd launched their project near Danga Bay at an average of RM650 psf,” he said, indicating that capital value of real estate in Nusajaya had appreciated. “It is not true that there is an oversupply of residential properties in Johor. (Otherwise) these developers would not achieve this kind of success.”

“The upside potential is just the prices alone. When you develop, you are assured of a good take-up (rate) of all your products. With better infrastructure, you will be able to fetch a premium of the prices of your products,” Syed Mohamed said after a signing ceremony between Iskandar Investment Bhd's subsidiary, Medini Iskandar Malaysia Sdn Bhd and Qingdao Zhuoyuan Investment Holding's Square Stone Holdings Sdn Bhd to build high-end condominium with an estimated gross development value (GDV) of RM2.6bil.

The high-rise property proposed to be known as Medini International starts from an average price of RM750 psf targeting buyers from Singapore, China, Malaysia, Japan and Korea.

The joint-venture company Zhouyuan Iskandar Sdn Bhd would develop the project in three different phases. Phase one and two covers a 16-acre land that is estimated to be completed within seven years. The project would take off at the end of this year.

Meanwhile, Zhuoyuan will be the sole developer of phase three with an estimated GDV of RM1.5bil.

Square Stone Holdings Sdn Bhd and Zhuoyuan Iskandar Sdn Bhd chief executive officer Wang Bin Wu said it was Zhuoyuan maiden foreign venture and the China company was attracted to incentives such as tax exemption and no sales restriction to foreigners to invest in Iskandar.

“We are also fascinated with the presence of catalytic projects like Legoland and EduCity which would add value to the entire development,” Wang added.

KUALA LUMPUR: Rentals for purpose-built offices in suburban areas outside Kuala Lumpur are expected to rise with vibrant business activities, good information and communications technology (ICT) and government projects there, said the valuation and property services Department (JPPH) of the Finance Ministry.

“Domestic and foreign investors in the region will also make it attractive,” said Dr Zailan Mohd Isa, director of the National Property Information Centre (NAPIC), a unit under JPPH.

She was speaking to reporters after the launch of the Purpose-Built Office Rent Index (PBO-RI) for Federal Territory of Kuala Lumpur for the first to fourth quarters 2011 by Deputy Finance Minister Datuk Dr Awang Adek Hussin.

The first rent index of its kind in South-East Asia was developed by NAPIC to provide a guide on current office rentals in Kuala Lumpur besides being a benchmark of the country's financial stability.

It comprises sub-indexes for four main regions - the KLCC-Golden Triangle (KLCC-GT), central business District (CBD), within city centre (WCC), and selected suburban areas.

According to the index, the KLCC-GT region was the most sought after location in the city in 2010, with the highest average rentals among the four regions.

In the fourth quarter of 2011, average office building rental per sq ft was RM4.66 in KLCC-GT, RM3.27 in CBD, RM3.36 in WCC and RM3.51 in the suburbs.

JPPH director-general Datuk Abdullah Thalith Md Thani said the department intends to produce the index every half-year for the country's main cities including George Town and Johor Baharu.

Purpose-built buildings are developed according to a prospective tenant's requirement.

Setia Haruman chairman Tan Sri Mustapha Kamal said such types of buildings can be part of a real estate investment fund (REIT) portfolio.

Mustapha was speaking to reporters after a tour of Cyberjaya with Minister of Internationl Trade and Industry (Miti) Datuk Seri Mustapa Mohamed.

Setia Haruman officials also had a meeting with Mustapha to further promote Cyberjaya as an IT hub among world-class companies.

Mustapha said Cyberjaya offices are attractive for investors as they have between seven per cent and eight per cent yield. Average rental there, including service charges, is about RM5.50 per sq ft.

Setia Haruman plans to build more residential, commercial and entertainment units in the coming years for its current 50,000 strong community. There are over 300 firms, including HSBC, Hewlett Packard, Shell and Dell operating in Cyberjaya at the moment.

Over the next five years, 16 major developers will build properties with an estimated gross development value of RM20 billion. A total of RM10 billion worth of projects have been completed.

CYBERJAYA: Cyberjaya's flagship developer Setia Haruman Sdn Bhd's RM20bil investment plan is on track and now it wants to attract 10 high-impact companies to set up operations in the ICT hub of Malaysia.

Under its RM20bil investment plan over the next five years, the developer said RM2bil had been invested in the first half of this year.

Setia Haruman's strategy is to develop purpose-built projects that will fulfill the needs of foreign companies seeking a footing in Cyberjaya.

High-impact companies are defined as organisations that can offer high-value employment, be it local or multi-national companies.

“Cyberjaya is going to be a vibrant place in the next five years and the whole development needs to grow organically,” Mustapha said.

He added that the companies would provide high-value employment which “if happens, the dream of become a high-income population will be realised”.

Mustapha said Setia Haruman would lease the commercial buildings and stand to gain from a recurring income stream. It will also sells some units to real estate investment trusts.

“Due to uncertainties, investors prefer to come and rent (buildings),” he said, adding that the rental should bring in 7% to 8% annual yield, making it attractive to REITs.

Mustapha said the rental for Setia Haruman's commercial property in the area was currently US$5.80 per sq ft, including service charge and maintenance.

Setia Haruman has another 1,000 acres of land to develop. It has developed 3,000 acres while another 3,000 acres allocated for utilities.

In total, Setia Haruman has developed RM10bil worth of projects in Cyberjaya.

Meanwhile, International Trade and Industry Minister Datuk Seri Mustapa Mohamed, who was also present, said that the place needed to be further promoted internationally.

The minister said there were 50,000 people living and working in Cyberjaya now compared with 20,000 in 2004.

“There are also over 300 companies here such as HSBC, Dell, Shell, HP which are some of the major employers. This is the place to develop if we are talking about high-value jobs for Malaysians,” he said.

Mustapa said the ministry would work together with Setia Haruman to promote the world-class facilities and infrastructure to global companies to locate their operations here.

KUALA LUMPUR: Lembaga Tabung Haji, which is in the midst of finalising its first commercial property acquisition in London, still has the cash to make more acquisitions going forward.

Its group managing director/chief executive officer Datuk Ismee Ismail said the pilgrims fund board has only used half of the RM7 billion that it has allocated to acquire real estate in Malaysia and overseas.

In an interview, he said the RM7 billion accounted for 20 per cent of the total fund managed by Tabung Haji, currently amounting to RM35 billion.

"I think we are still under-investing. The investment in real estate has not touched RM7 billion. Our focus firstly will be on properties in Malaysia, which we have started for the past three years," he said.

Ismee said the remaining RM3.5 billion may not be used up entirely this year even though there were many viable properties up for grabs.

KUALA LUMPUR: Lembaga Tabung Haji (LTH), which is in the midst of finalising its first commercial property acquisition in London, still has the cash to make more acquisitions going forward.

Its group managing director/chief executive officer, Datuk Ismee Ismail, said the pilgrims fund board had only used half of the RM7bil that it has allocated to acquire real estate in Malaysia and overseas.

Ismee: ‘I think we are still underinvested.’ — Bernama

In an interview with Bernama, he said the RM7bil fund accounted for 20% of the total fund managed by LTH, currently amounting to RM35bil. “I think we are still under-invested. The investment in real estate has not touched RM7bil. Our focus firstly will be on properties in Malaysia, which we have started doing that for the past three years,” he said.

Ismee said the remaining RM3.5bil allocation may not be used up entirely this year even though there were many viable properties up for grabs. “Buildings are plenty but we have to be cautious in our evaluation before acquiring any of them.

“We have to ensure the returns are competitive every year, so we have to study the types of investments that will give recurring income and I believe the property sector is one of them,” he said.

On the proposed acquisition of commercial buildings in London, he said, the deal, which was estimated to be worth 165 million pound sterling, was expected to be completed by this September.

“In UK, we wanted to buy commercial buildings and not hotels or housing because we want to get the rents which are reasonable and the rental is for long tenure.

“Like the present building we are evaluating, the tenure is for 13 years. Those are the kinds of areas that we are looking for in real estate investments,” he said.

Ismee said based on the fund's investment analysis, investment in London, if it's fully funded by cash, the expected return would be at least 5.2% to 5.5% yearly, which was competitive.

“If we apply a certain percentage of gearing and take bank borrowings, the yield or rental will increase. Currently, we are going for cash basis but we may refinance the acquisition by bank borrowings later.

“This is our first acquisition so I think we will take step by step,” he said, adding that LTH was actively looking for more commercial properties in London.

Apart from London, LTH was also actively looking to invest in real estate in Mecca and Madinah as well as Jeddah, Saudi Arabia, he said.

Ismee said Saudi Arabia did not allow non-citizen to own properties in Mecca and Madinah, therefore any investments by Tabung Haji must through long-term leasing.

Tabung Haji currently earns a recurring income from its 25-year lease of the Hajar Towers Hotel in Mecca and the 10-year lease of the Movenpick Hotel in Madinah, both in Saudi Arabia.

At the moment, LTH owns several landmarks in Kuala Lumpur, which include the Tabung Haji building, TH Selborn, Tabung Haji tower in Platinum Park as well as a recently acquired, 13-storey boutique office building in Bangsar South.

PETALING JAYA: Zecon Bhd announced that its unit Zecon Land Sdn Bhd, with Zecon Land's 51% owned subsidiary Zecon Petra Jaya Sdn Bhd, had entered into a sale and purchase agreement with Lembaga Tabung Haji (LTH) for the sale of a retail mall for RM155.85mil.

The retail mall, with a gross floor area of 774,859 sq ft, will be situated in Kuching, Sarawak and be developed by Zecon Land for LTH.

The development of the mall will be funded via a mix of internal generated funds and borrowings.

In a development agreement dated Jan 20, 2011, Zecon Petra Jaya had appointed Zecon Land to undertake the construction of an integrated mixed development known as the Vista Tunku Project on the project land. LTH had requested Zecon Land to construct the mall, with an anticipated completion date two years from commencement of works.

Thursday, July 19, 2012

KUALA LUMPUR: Rental rates for purpose-built offices in Kuala Lumpur were generally stable in the last three years, except for certain suburban and city centre areas which showed an upward trend, according to the 2011 Purpose Built Office Rent Index (PBO-RI) for Federal Territory of Kuala Lumpur.

“Looking at the data... the market is still good,” National Property Information Centre (Napic) director Dr Zailan Mohd Isa said at a pre-launch briefing of the 2011 PBO-RI which will be launched today.

The rent index has four regions, namely Kuala Lumpur City Centre-Golden Triangle (KLCC-GT), Centre Business District (CBD), within city centre (WCC) and suburban.

According to the rent index, average monthly rentals for purpose-built offices in the WCC region had increased gradually from RM2.92 per sq ft in the first quarter of 2009 to RM3.46 per sq ft in the fourth quarter of 2011.

This meant that average monthly office rentals in the WCC region had increased 18.5% over a three-year period.

It was also noted that average monthly office rentals in the suburban region had appreciated by 13.2% over a three-year period, rising from RM3.10 per sq ft in the first quarter of 2009 to RM3.51 per sq ft in the fourth quarter of 2011.

Meanwhile, although the KLCC-GT region is the most sought after location in the city, average monthly office rentals were stable (a slight rise from RM4.60 per sq ft in the first quarter of 2009 to RM4.66 per sq ft in the fourth quarter of 2011).

However, the CBD region suffered a drop in average monthly office rentals, from RM3.46 per sq ft in the first quarter of 2009 to RM3.27 per sq ft in the fourth quarter of 2011.

For the entire Kuala Lumpur region under review, average monthly office rentals had increased sightly over a three-year period, from RM3.91 per sq ft in the first quarter of 2009 to RM4.04 per sq ft in the fourth quarter of 2011.

The rent index, which will be produced on a quarterly basis, is developed by Valuation and Property Services Department (JPPH), with assistance from Universiti Teknologi Mara (UiTM) and University of Malaya.

Zailan said it was the first rent index of its kind in the Asean region.

“It is based on data from actual rental agreements, and not asking rates.”

The rent index defines purpose-built offices as buildings with office use of not less than 75% of net lettable area, and has compiled rental data from 6,831 tenancy leases from 167 buildings.

Zailan said the rent index's aim was to provide a guide on current market rentals for investors, and a benchmark for the financial stability of the country.

“We also want to attract multinational corporations to set up regional headquarters in Kuala Lumpur,” she said.

Zailan also said the PBO-RI would be expanded eventually to cover all the major cities and towns in Selangor, followed by Penang and Johor.

“Getting data is the most dificult part. We urge all property managers and owners to co-operate with us in providing data.”

KUALA LUMPUR: Office rentals in Kuala Lumpur had remained stable over the past three years until end-2011, easing concerns over a possible property bubble.

This is based on data from the Purpose Built Office Rent Index Wilayah Persekutuan Kuala Lumpur (PBO-RI WPKL) produced by National Property Information Centre (Napic), a unit under the Valuation and Property Services Department of the Finance Ministry.

The first edition of the index will be launched today by Deputy Finance Minister Datuk Dr Awang Adek Hussein.

Napic director Dr Zailan Mohd said the index, the first of its kind in Asean, would be used as a tool to gauge the health of the country's economy.

It was also created to attract multinational companies to set up headquarters here, she said.

PBO-RI was designed to provide an overview of the office rental index for Kuala Lumpur, with special focus on investment grade building.

In line with the Financial Soundness Indicators by the International Monetary Fund, the index can be used as a benchmark for the financial stability of the country.

At a pre-launch briefing held yesterday, Zailan said looking at the overall data, the capital's purpose built office market was healthy. A purpose built office in this context is one with at least 75 per cent of space for office.

Overall, office rentals within the Kuala Lumpur-Golden Triangle zone are higher than average.

In the fourth quarter, the rent per sq ft was RM4.66 compared with the median rent of RM4.50 per sq ft.

The highest rent per sq ft in this zone is at RM11.50.

Similarly, rentals in the suburban areas including Bangsar, Bukit Kiara and Damansara Heights are termed "extreme high rent" as per-sq-ft rent in the final quarter of 2011 was RM3.51.

PETALING JAYA: Ken Holdings has proposed to acquire land owned by Malaysia Building Society Bhd (MBSB) for RM56.17mil for the development of a green township.

In filings with Bursa Malaysia, the company said it would be acquiring the entire stake of MBSB's unit, Gadini Sdn Bhd. Gadini is the registered and beneficial owner of four parcels of land measuring a total of about 992,433 sq ft in Johor. The company said the estimated gross development value and cost for the potential development of the properties is about RM1.2bil and RM914.5mil respectively.

“The proposed development is hence expected to result in an estimated gross development profit of about RM300.9mil for the Ken Holdings Group over the next six to seven years commencing in 2013. It's too preliminary to ascertain the exact gross development value, gross development cost and gross development profit for the proposed development at this juncture,” it said.

PETALING JAYA: Hua Yang Bhd posted a higher net profit of RM16.47mil for its first quarter ended June 30, compared with RM11.48mil in the previous corresponding period. Revenue surged to RM97.96mil from RM61.75mil previously.

In filings with Bursa Malaysia, it said steady construction progress recognition especially for its service apartments projects in Klang Valley including One South and Symphony Heights as well as Taman Pulai Indah in Johor Baru and Bandar University Seri Iskandar at Perak were the major contributor to the higher revenue and pre-tax profit.

Wednesday, July 18, 2012

KUALA LUMPUR: Trinity Corp Bhd is planning further land sale worth at least RM100 mil to RM200 mil in the current financial year ending Jan 31, 2013 as part of efforts to strengthen its financial footing.

Chua (left) says Trinity still has 1,229ha in places such as Ampang, Sepang, Puchong, Bukit Jalil and Rawang.

Executive director Chua Kim Lan said the group has 1,229.2ha left, mainly in Selangor, comprising commercial, residential and industrial properties.

“The pieces of land are at various strategic locations in Ampang, Sepang, Puchong, Bukit Jalil and Rawang,” she told reporters after the company's AGM.

In the last financial year, Trinity signed a settlement agreement with the Menteri Besar Selangor Inc (MBI) after shareholders approved on March 30, 2011 to reduce some of its long-standing debts owed to financial firms and creditors following long-delayed projects.

Under the agreement, the group, formerly known as Talam Corp Bhd, disposed its properties to MBI totalling RM363.58mil.

It also sold 10.352ha in Mukim Petaling for RM39.46mil and 18,582 sq m of commercial land in Kuala Langat for RM52.12mil.

For the financial year ended Jan 31, 2012, the group's pre-tax loss fell to RM124.418mil compared with the pre-tax loss of RM153.753mil in the same period last year.However, revenue rose to RM637.424mil from RM183.395mil, mainly contributed by land sale.

Its gearing position improved to RM461.72mil from RM726.62mil, down by 36.46%.

Chua said Trinity needed more than two years to revert to the black as it was currently undergoing a lot of debt impairment. She said the company would continue to go into joint-venture projects with reputable corporations.

“We also plan to develop residential properties on 199.388ha in Berjuntai Bestari in Selangor,” she said, adding that the property would be developed over 10 years from 2016.

Asked on questionable land deals between the company and MBI as alleged by certain quarters recently, Chua said: “The decision was above board. The deals were conducted transparently.”

MBSB said on Wednesday it was selling the 3.97 million shares for RM40.56mil cash.

“Total cash proceeds to be received by MBSB from the proposed disposal will be RM56.17mil,” it said, adding the amount included RM13.61mil which was earlier advanced to Gadini and tax liabilities of RM2mil.

To recap, on Jan 7, 2009, MBSB announced it Gadini had entered into a sale and purchase agreement to disposes of several properties in Johor to Sazean Holdings Sdn Bhd for RM70mil.

Subsequently, Sazean decided to novate all its rights and liabilities under the sale and purchase agreement to Ken Holdings' unit, Ken Property Sdn Bhd.

MBSB then entered into the share sale agreement with Ken Holdings to sell Gadini.

Tuesday, July 17, 2012

The British High Commission: There are mixed views on the indicative value of the three-acre land but some quarters estimate it be as hig h as RM200mil.

PETALING JAYA: Developers are eyeing the premises of the British High Commission in Jalan Ampang, Kuala Lumpur due to the location and size of the land, property consultants said.

However, there were mixed views on the indicative value of the three-acre land which according to sources could be as high as RM200mil. That works out to RM1,525 per sq ft.

It will be relocating next year to the just-completed Menara Binjai in Jalan Ampang.

SavillsRahim and Co, which is the marketing agent for the property, would be renting on the 27th floor of the 35-storey building.

The British was given the current premises in Jalan Ampang as a swap for giving up Carcosa, once the home of Frank Swettenham, the highest ranked British representative to the Malay states.

International property consultants VPC group said RM1,500 per sq ft was a fair reflection of the open market value of the property in that location.

VPC director and chartered surveyor James Wong said: “Commercial land within the Golden Triangle are much sought after by developers. This is particularly so for those developers who do nott have an existing foothold within the Golden Triangle.

“So it is very likely for this land to be tendered and sold at above RM1,500 per sq ft,” Wong said.

PPC International Sdn Bhd said the reserved price was conservative considering the locality and land size.

“It is very difficult to come across land in such an ideal location in Jalan Ampang and close to the Jalan Ampang-Jalan Tun Razak intersection and the Petronas Twin Towers,” said Siders Sittapalam of PPC International.

He said the land would be favourable for an integrated development.

“In these two respects, I would say that land is unique.”

Siders drew comparison with other commercial land deals transacted in the city last year. There were three parcels with total acreage of about 27,000sq ft in Jalan Sultan Ismail, Kuala Lumpur which were sold for RM65mil, or RM2,400 per sq ft.

Other land deals included a 28,000 sq ft parcel in Persiaran Stonor, Kuala Lumpur which went for RM50mil (or RM1,770 per sq ft) and a 43,000 sq ft parcel, also in Persiaran Stonor, for RM72mil (RM1,671 per sq ft). A parcel along Jalan Raja Chulan of about 20,000 sq ftwas sold for RM39mil (or RM1,914 per sq ft), Siders said.

Another source said the latest transaction occurred late last year when Mulpha International Bhd sold a 32,000 sq ft parcel in Jalan Sultan Ismail, Kuala Lumpur for RM104mil, or RM3,300 psf, a benchmark price for development landin Kuala Lumpur city centre.

The single salient feature of this deal was that it was sold with a planning approval.

The SwhengTee International Real Estate Exchange Centre, will be located in VSQ Corporate Tower 2 in Petaling Jaya, will act as a platform for networking support among property sector players. It is due to commence operations January next year.

Founder Gavin Tee said the premise will be housing all property investor clubs and service providers such as real estate agents, valuers, developers, lawyers, architects, interior designers, feng shui masters and financial advisers.

"It will be just like a stock exchange where buying and selling takes place surrounded by ample resources related to property, such as library and bookstore stocking books on real estate," he said at the media launch here yesterday.

Tee added that it will also have seminar rooms and a permanent exhibition space to allow real estate and marketing professionals conduct their activities and events, and an international section to cater for all overseas properties.

He said visitors can conveniently get advice and survey the property market at the centre.

"This will be a landmark place for all property buyers and investors. This will be very advantageous to the tenants when many of the industry's professionals set up their base there," said Tee.

The launch of the centre yesterday was witnessed by some of world-renowned former NBA legends and members of the All Star US PRO-Basketball Alumni, including Mitch Richmond, Dennnis Rodman and Horace Grant.

The basketball stars, whom Tee said are keen property investors, are in Malaysia on the invitation of SwhengTee International Sdn Bhd for a tour of Kuala Lumpur and will play a match in Shah Alam tonight.

KUALA LUMPUR: Property developers should try to sell off Bumiputera units through promotions and property exhibitions, before asking for a release mechanism for the unsold units.

"They should advertise in Malay and English newpapers and embark on other promotion measures. If not, they would be stuck and there will be property overhang," said Shikin Taib, managing director of MMC Sdn Bhd.

According to findings from a survey conducted by the Real Estate and Housing Developers' Association Malaysia (Rehda), Bumiputera allocation is the top reason contributing to property overhang.

Developers are complaining that unsold Bumi lots are affecting their profit margin.

"They are getting an average 30 per cent profit margin from each development. Their margins would be affected if they don't sell the Bumi lots at the beginning of the project," said Shikin.

MMC was the organiser of the Bumiputera Property Exhibition (BPEX 2012), a property showcase held over the weekend. It exhibited RM1.5 billion worth of properties, majority of which was located in the Klang Valley. Overall, 42 property developers took part, including PKNS, Glomac, MK Land, The Lion Group, Glenmarie Properties, Melati Ehsan and Equine Capital. They exhibited their residential properties, ranging from RM99,000 to RM8 million per unit.

Shikin said some RM100 million is expected from the sale of Bumi lots, about 40 per cent more than the last BPEX held in April.

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